I'm a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am. I have written for The Times, Daily Telegraph, Express, Independent, City AM, Wall Street Journal, Philadelphia Inquirer and online for the ASI, IEA, Social Affairs Unit, Spectator, The Guardian, The Register and Techcentralstation. I've also ghosted pieces for several UK politicians in many of the UK papers, including the Daily Sport.

How Enough Project and Global Witness Make Life Harder In Congo

It’s an absurd allegation, isn’t it? That the Enough Project and Global Witness are in part responsible for snatching away of any way of making a living, of people in The Congo. A place where being deprived of even a badly paid and dangerous job like artisanal mining can indeed lead to death.

For of course the Enough Project and Global Witness have been fighting hard for these very miners, haven’t they? Leading the crusade against blood minerals. Succeeding in their crusade even, by managing to have conflict mineral prevention clauses written into the Dodd Frank Act.

But here’s the problem: good intentions do not always translate into good results out there in the real world.

I’m reminded of this by this paper. It was said when all of this was being campaigned for that just a few tens of millions of dollars a year would be enough to make sure that slave mining, mining that just went to feed violent militias, could be banished from The Congo. Seems that it’s not going to be quite that cheap:

Our analysis shows that the published figure of $71.2 million by the SEC underestimates the implementation cost, in part because it does not take into account the range of actors affected by the statutory law. In light of Section 1502, substantial traceability reforms would need to be implemented throughout the supply chain – from the mine to final product manufacturing – in order for disclosure to work. On the other hand, the NAM estimate of $9-16 billion overstates these costs by inflating the supplier number and not taking into account significant overlap in supplier/customer relationships, as well as cost efficiencies from existing (and developing) information exchange platforms. We present a third model focusing on the burden to the affected issuers and their 1st tier suppliers estimating that the actual cost to and of implementing the law is $7.93 billion.

Out by only two orders of magnitude, only 100 times. Ooops!

As a starting position we could probably do rather better for the people of the Congo with $7 billion than just stopping a few militias mining a few minor metals (this is a technical term, tantalum and tungsten are minor metals). We could probably stop a few militias mining a few minor metals for much less than $7 billion too. A battalion of Marines comes to mind.

The first part of what has gone wrong here is that in order to stop these few militias from mining these metals a system has been proposed, then legislated into law, which insists that everyone in the world must track, and be able to prove that they have tracked, where their supplies of these minor metals come from. Everyone who puts a tantalum capacitor into a piece of electronics has to be able to show that that tantalum did not come, by however roundabout a route, from this area of conflict minerals. That’s just not a sensible way of doing things. Indeed, I pointed out when he idea was first being discussed that there are only 5 or 6 plants globally capable to turning the mineral, coltan, into tantalum. Just get those factories to sign up and you’re done. But no, a vast bureaucratic apparatus was deemed necessary instead.

But this isn’t the only problem we’ve got here. That we’ve a vastly expensive solution to a bad but small problem. It gets worse: Dodd Frank is law, everyone’s ready to start doing the paperwork. But there is no paperwork to do. As the rest of this paper shows, the detailed regulations just aren’t done yet. No one knows whether recycled scrap will be included (it would be insane if it were). No one knows what paperwork does prove that we did use conflict minerals, or that we didn’t. No one even knows (see the scrap) what actually qualifies as a conflict mineral yet. So how can anyone trade in anything at all that might, possibly, be a conflict mineral in the future?

The answer of course is that we can’t. Now I’m not in this specific part of the metals business in my day job but I’m close enough to it to see some of what is happening. (For example, I don’t buy columbite, tantalite, wolframite or cassiterite but I’d love a few hundred tonnes of a closely related one, ixiolite.) What is happening is that all miners in that area of Central Africa are being prevented from selling their products. Don’t just take my word for it either:

New legislation will require U.S. companies to disclose the use of certain minerals, including tantalum, in their products and to describe the process used to ensure the purchase of these minerals does not fund the illegally armed groups operating in the DRC.

Because there currently is no recognized system to verify that the sources of minerals from the DRC are conflict free, efforts to secure supply chains have led to a de facto embargo of minerals from the region while such systems are being developed.

Tens of thousands of people in the DRC depend on artisanal mining, many operating in regions where conflict is not present. Their livelihoods and the economic stability of the region have been threatened by the de facto ban.

That’s Motorola, one of the companies trying to sort out this appalling mess created by Dodd Frank and the Enough Project and Global Witness. I’ve had more personal communications telling me that up to 100,000 people in North Kivu alone are now without any method of making a living at all. Because, while all of this might have been done with the very best of intentions it was done so badly that near no one is willing to purchase any minerals from the area. Thus all miners are unemployed: in a country not exactly known for the generosity of its welfare state and unemployment pay. Not in fact known for the existence of either.

There’s a sting in the tail of all of this though. The OECD publishes guidelines for how multinational enterprises should act.

To avoid causing or contributing to adverse impacts on matters covered by the Guidelines through their own activities includes their activities in the supply chain. Relationships in the supply chain take a variety of forms including, for example, franchising, licensing or subcontracting. Entities in the supply chain are often multinational enterprises themselves and, by virtue of this fact, those operating in or from the countries adhering to the Declaration are covered by the Guidelines. 18. In the context of its supply chain, if the enterprise identifies a risk of causing an adverse impact, then it should take the necessary steps to cease or prevent that impact. 19. If the enterprise identifies a risk of contributing to an adverse impact, then it should take the necessary steps to cease or prevent its contribution and use its leverage to mitigate any remaining impacts to the greatest extent possible. Leverage is considered to exist where the enterprise has the ability to effect change in the wrongful practices of the entity that causes the harm. 20. Meeting the expectation in paragraph A.12 would entail an enterprise, acting alone or in co-operation with other entities, as appropriate, to use its leverage to influence the entity causing the adverse impact to prevent or mitigate that impact.

I think we could argue, in fact I do argue, that the Enough Project and Global Witness are multinational enterprises and are therefore covered by this.

The essence of which is the Pottery Barn principle: you broke it, you bought it. These two NGOs have, with quite possibly the very finest of intentions, reduced hundreds of thousands of Congolese from poverty to destitution. Those two NGOs are directly responsible for miners across Central Africa simply not being able to sell their product because for all the joy and glory of stopping militias from selling stuff, those two NGOs have created a system which stops anyone from selling their stuff.

And I think we should be asking what they’re going to do about it. What are they doing about it? And how are they going to compensate those whose lives they are currently affecting so grievously?

No, you don’t get out of these responsibilities just because you were trying to do right. You’ve broken it, it’s your problem now, you fix it.

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